Responsibilities in a Free Enterprise System Chapter 3: The - - PowerPoint PPT Presentation

Lesson 2: Roles and Responsibilities in a Free Enterprise System

Chapter 3: The American Free Market System

Role of the Entrepreneur

Lesson 2: Roles and Responsibilities in a Free Enterprise System

The Role of the Entrepreneur

• Entrepreneurs are important because they are

willing to take risks to start new businesses, so they become the catalyst of the free enterprise economy.

• Most entrepreneurs fail, but some survive and a

few even become wealthy.

• Successful entrepreneurs attract other firms to

the industry, eventually leading to new products, greater competition, more production, higher quality, and lower prices.

Role of the Consumer

Lesson 2: Roles and Responsibilities in a Free Enterprise System

The Role of the Consumer

• Consumers ultimately determine

WHAT to produce.

• The term consumer sovereignty

reflects the idea that the consumer rules the market.

• Consumers play an important role in

the American free enterprise economy because their spending helps determine what is, and is not, produced.

The Role of the Government

Lesson 2: Roles and Responsibilities in a Free Enterprise System

The Role of the Government

• Government has become

involved in the American free enterprise system because its citizens want it that way.

• The government passes

laws to help protect citizens from false advertising, unsafe food and drugs, environmental hazards, and unsafe products.

The Role of the Government (con’t)

• All levels of government

provide goods and services for citizens, including education, highways, public welfare, and many others.

• The government regulates

economic activity to help preserve competition in the marketplace.

• The government spends

more than all private businesses combined, so it has become a huge consumer in the marketplace.

Mixed or Modified Free Enterprise

Lesson 2: Roles and Responsibilities in a Free Enterprise System

Mixed or Modified Free Enterprise

• In a mixed or modified free enterprise

economy, people and businesses carry out their economic affairs freely, but are subject to some government intervention and regulation.

• The question of how much government

involvement is necessary is one of the great unsolved questions of our times.

• The American system is a mixed or

modified free enterprise economy because the majority of the people want it that way.